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Consent-General Government # 11.
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| Board of Supervisors |
County Administrator |
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| Subject |
| Adopt resolutions authorizing loans totaling up to $522,081 to North Davis Meadows County Service Area for sewer fund deficit and water consolidation project design costs. (Demeter fund impact $522,081) (4/5 vote required) (Blacklock/Gabor) |
| Recommended Action |
- Adopt resolution authorizing a one-year loan, starting July 1, 2017, of up to $430,000 to North Davis Meadows County Service Area (CSA) from the Demeter Fund, for design of the Water Consolidation Project for the CSA;
- Adopt resolution authorizing a three-year loan, starting July 1, 2017, of $92,081 to the North Davis Meadows CSA from the Demeter Fund to close a deficit in the CSA sewer fund. (4/5 vote required); and
- Adopt budget resolution amending the 2016-17 budget to increase appropriations in the Demeter Endowment Fund to provide loan funding to the North Davis Meadows CSA.
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| Strategic Plan Goal(s) |
| Operational Excellence |
| Reason for Recommended Action/Background |
Water Consolidation Project
The North Davis Meadows CSA has embarked on a Water Consolidation Project with the City of Davis and is currently in the planning (design) phase. Water fees were increased in 2016 to pay back an anticipated State Revolving Fund (SRF) planning loan of $430,000 over 20 years. Planning loans, however, must be repaid within 5 years. The CSA is now pursuing a combined planning and construction SRF loan that can be paid back over 30 years. Once design is complete in September, and construction estimates are available, the 2016 water fee increase will be repealed and a new Proposition 218 water fee ballot conducted to include all costs of the projects. Once construction bids are received in spring of 2018, the SRF loan application can be completed with award currently anticipated in May of 2018. In the meantime, planning costs are being incurred and expected to amount up to $430,000.
On May 12, the County Debt Committee approved a loan from the County Demeter Fund of up to $430,000 to the North Davis Meadows CSA for one year for planning costs for the Water Consolidation Project until the SRF loan is awarded and the County loan can be repaid. Interest will be charged at the county treasurer's pool rate. The resolution formally approves the terms of this loan.
Sewer Fund
The North Davis Meadows CSA sewer fund has been operating in a deficit since 2013-14, with revenues not keeping up with expenses. This structural deficit has grown to $92,081. On May 12, the County Debt Committee approved a loan from the County Demeter Fund of up to $92,081 to the North Davis Meadows CSA for one year to fill this gap, with the expectation that remedial action will be taken to close the gap. Interest will be charged at the county treasurer's pool rate. This action formally approves the terms of that loan.
With changes being made to the management of the grinder pump system, the deficit in the sewer fund is not anticipated to grow further, but cannot quickly be resolved by the CSA while in the midst of a costly water consolidation project. Once the water consolidation project is complete (fall of 2018), the City of Davis will begin direct billing residents for sewer services. The current annual fee for City sewer services for the CSA coincidentally is commensurate with the deficit. After a year of the City direct billing residents for sewer services and the CSA continuing to collect the same sewer fee without the City sewer services obligation, the CSA will realize enough savings to allow for repayment the County loan in full in 2019. Once the County loan is repaid, the CSA's sewer fund revenues and expenses will be re-evaluated and the fee adjusted accordingly. |
| Collaborations (including Board advisory groups and external partner agencies) |
| Financial Services, County Counsel, North Davis Meadows CSA Advisory Committee, County Debt Committee |
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| Fiscal Impact |
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| Source of Funds for this Expenditure |
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Explanation (Expenditure and/or Revenue) |
| Further explanation as needed: |
| The loan of up to $430,000 for design of the Water Consolidation Project is expected to be repaid within a year following award of a State Revolving Fund loan. The loan of $92,081 to address the deficit in the sewer fund is expected to be repaid in two years following completion of the water project, another year of collecting the sewer fee at its current rate and a year without the obligation of paying City of Davis sewer service fees. The CSA is expected to return next year to request an extension of this loan. |
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